WILMINGTON, Del. — CBS Corp. won a ruling temporarily blocking the daughter of controlling shareholder Sumner Redstone from interfering with its board’s preparation of a defensive measure to ward off a merger with Viacom Inc.
Shari Redstone, a CBS director and president of the family’s movie-theater owner National Amusements Inc., can’t make any moves opposing the company’s proposal to wipe the Redstones’ voting control while Delaware Chancery Court Judge Andre Bouchard weighs challenges to the plan. After a hearing, Bouchard ordered both sides to stand down until he rules Thursday.
The judge heard arguments in a CBS lawsuit seeking to allow its board to move ahead Thursday with a proposal to dilute the Redstones’ control of the broadcaster. That would allow CBS to fight off the Redstones’ demands that the media company rejoin with Viacom, owner of a television network, MTV, Comedy Central, and Paramount Studios.
Lawyers for National Amusements Inc., which owns a controlling interest in CBS and Viacom, argue that CBS was misinformed and there’s no effort underway to remove directors, as alleged in the suit. The Redstone family is upset with a CBS board proposal that would wipe out their voting control.
CBS shares fell 1.1 percent Wednesday to $53.83, while Viacom was little changed at $28.27.
It’s an unusual corporate fracas over two media properties that aren’t only controlled by the same company— NAI — but also were part of a single conglomerate until 2005. After more than a year of opposing National Amusements’ demands to pair up the businesses, chief executive Leslie Moonves and some CBS directors dared to take on the Redstone family.
Shari Redstone, who took over as NAI’s overseer after health issues sidelined her billionaire father, opposed the split of the two companies. She’s seeking to weld them back together on her terms, with Viacom CEO Bob Bakish as the recombined company’s second-in-command. Moonves prefers to keep his own people in charge.
“I was never a great proponent of the split of the two companies,” Shari Redstone said at a 2016 conference, according to Vanity Fair magazine. “The path each company took could have been different under different leadership and this is why a combination should be explored now.” Shari Redstone also sits on Viacom’s board.
Viacom’s value has plummeted in recent years due to the shrinking viewership of its cable networks. All TV companies are struggling from the migration of viewers to online services Netflix and YouTube.
Viacom has suffered more than most given its reliance on young viewers, and its lack of developing hit shows.